Answer to Question #143847 in Microeconomics for Taif

Question

Mariam just inherited an amount of money. While she plans to squander some of it away, how much should she deposit in an account earning 5% interest per year if she would like to have OMR 10,000 in the account in 10 years?

Answer 1

In this case we use the following formula

where P.V is present value

F.V is future value

10000 = $P.V\times [(1+0.05)^{10} ]$

$F.V = P.V \times [(1+i)]^n$

$10000 = P.V\times[(1+0.05)]^{10}$

10000=1.62889PV

$P.V= \frac{1000}{1.05^{10}}$

P.V =6139.13